Ammonia pipeline leak in Togliatti

Russian environmental organization Green Patrol recently reported on an ammonia leak from the Togliatti-Odessa pipeline, which, stretching from Russia to the Ukraine, is the longest ammonia pipeline in the world. TogliattiAzot, the chemical company responsible for the pipeline has shown little interest in responding to the ongoing environmental crisis. The company’s majority shareholders are currently not even legally allowed to enter Russia, which raises questions as to how they will take action in responding to the situation.

The leak occurred in the Ternovo district of the Voronezh region of Russia on June 21th, causing an unprecedented environmental and health disaster that has gone underreported in both Russian and international media. According to the press release issued by Green Patrol, ammonia concentrations were found to be 50-70 times greater than the maximum permissible levels within 150 meters (492 ft) from the site of the pipe rupture. The Russian newspaper Pravda reports that a total of about 5 tons of deadly, poisonous ammonia was released into the atmosphere as a result of the accident.

Place of ammonia pipeline spill.

The leak has led to severe pollution of air, soil and water, with irreparable damage to local flora and fauna, including agricultural crops and forests. Thousands of dead fish surfaced in the river of Sukhoi Karachan. The ammonia-contaminated soil will not be suitable for agriculture for the next 50 years.
Local authorities evacuated more than 800 people from the surrounding area. Nearby villages, also heavily affected, were instructed to take further protective measures. A cattle guard far from the accident was found passed out on the ground after prolonged ammonia inhalation. He was rushed to the hospital, where he was diagnosed with lung burns.
While ammonia is a substance naturally found in the human body, industrially produced ammonia is most commonly used as synthetic fertilizer, as well as a key ingredient in refrigerant gas, industrial-strength cleaning supplies, plastics, pesticides, and other chemicals. Because of ammonia’s corrosive properties, exposure to high concentrations can cause a range of negative health effects, from burning of the eyes and respiratory tract, to lung damage and death. Experts note that if the leak had started during the night when local residents were asleep, up to 2500 people could have lost their lives. The fact that there were no fatalities came as a sheer stroke of luck.
One of the world’s largest ammonia producers, TogliattiAzot did not contact the affected villages’ head of administration until a whole week after the incident, and has yet to offer any monetary compensation. The regional governor, Alexei Gordeyev, has since initiated a lawsuit against the company. According to Pravda, Russian President Vladimir Putin is taking the situation under special control, as nearly 1,400 kilometers (869 miles) of the ammonia pipeline run through the territory of Russia. What kind of “special control” that might be remains unclear.

Workers had to isolate the part of pipeline.

Authorities have launched an investigation to uncover the exact causes of the pipeline accident, which currently remain unknown. However, it is likely that bad corporate governance led to the leakage incident, as TogliattiAzot has previously been accused of violating environmental and manufacturing regulations. Taking a closer look at the backgrounds of the company’s top decision makers –the majority shareholders– it becomes evident why they might not have been personally invested in the well-being or ethics of the enterprise.

The majority shareholders of Togliattiazot — the Makhlai family and Swiss businessman Andreas Zivy — have not appeared in Russia for the past ten years. Sergei Makhlai (Chairman of the Board of Directors of JSC TogliattiAzot) moved to the United States in 1994, where he subsequently became a U.S. citizen. Co-owner Vladimir Makhlai fled Russia in 2005, hiding from prosecution regarding fraud and tax evasion. And former general manager of the company, Evgeny Korolev, suspected of large-scale fraud, moved to London in 2013. Most recently, in late 2014, the directors of Togliattiazot were even put on Interpol’s international wanted list.

In other words, Sergei Makhlai, Vladimir Makhlai, Andreas Zivy (the head of the Swiss agricultural company Ameropa) and Director of Nitrochem Distribution, Beat Ruprecht, cannot legally enter Russia to control and supervise the ammonia chemical plant.

As a result, the company has not held a single meeting of the Board of Directors in Russia during the last decade . According to Pravda, “Under the Russian corporate law, all joint stock companies are required to hold annual general meetings of shareholders before June 30. As of the end of July, no such meeting has been conducted.”

The Russian governmental watchdog on ecology and industrial safety, Rostechnadzor, issued several unheeded warnings against TogliattiAzot, citing 558 technical violations, such as worn-out equipment, back in 2012. The company has not prioritized investing in these safety measures, even though it boasted paying dividends of 2.9 billion rubles ($51 million) in 2011, 3.9 billion rubles ($69 million) in 2012-2013 and a hefty 5.3 billion rubles ($95 million) in 2014. Lack of modernization of the manufacturing systems might also explain why the company only produces at60% capacity, with 2.9 million tons of ammonia produced in 2014.

It is still uncertain how this accident will influence the global ammonia market as production might decline due to repair downtime. Preventing a repeat of this disaster will depend on whether TogliattiAzot begins to follow regulation,s and starts listening to the complaints of minority shareholders, who might be better-in touch with the company’s needs. In the meantime, the residents of the Ternovo district will continue to suffer from the consequences of the pipeline rupture for years to come.